TaxTMI 
TaxTMI 
2025 (10) TMI 178
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....d by the Customs, Excise and Service Tax Appellate Tribunal, West Zonal Bench, Ahmedabad (CESTAT). "(a) Whether in the facts and circumstances of the present case, the Tribunal is justified in holding that there were no grounds for invoking extended period of limitation available under the proviso to Sub Section (1) of Section 11A of the Central Excise Act, 1944, despite suppression of material facts with intent to evade payment of duty and despite show cause notice having been issued in the year 1998, demanding duty relating to the period 04.07.1995 to 22.10.1996? (b) Whether in the facts and circumstances of the present case, the Tribunal was justified in holding that the demand was barred by limitation, despite evasion of central excise duty amounting to Rs. 11,05,67,466/ involved in clearance of 11,61,099 Kgs. of Draw Warped Polyester Yarn of the value of Rs.19,87,87,595/ manufactured and removed clandestinely by the respondent by the recourse to fraud/willful misstatement of facts/suppression of facts and in contravention of provisions of the Central Excise Act, 1944 and the Rules made thereunder, entitling the invocation of the larger period of limitation un....
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....ture. By Notification No. 35/95-CE dated 16.03.1995 and Notification No. 84/95-CE dated 18.05.1995 process of warping was exempted. 3.4. The show cause notice dated 26.03.1998 was issued upon the respondent assessee to show cause as to why the excise duty at the appropriate leviable rate should not be recovered on manufacture of draw warped yarn polyester filament yarn and removal by the respondent assessee along with interest and penalty by invoking the proviso to Section 11A of the Act for extended period of limitation on the ground that the respondent assessee removed goods clandestinely by recourse of fraud, willful misstatement and suppression of facts the goods liable for to excise. 3.5. The show-cause notice dated 26.03.1998 was adjudicated by Commissioner of Central Excise and Customs, Surat-II by passing Order-in-Original dated 23.12.1998 wherein it was held that draw warping undertaken by the respondent would amount to manufacture and therefore, confirmed the demand of duty of Rs. 11,05,67,466/- along with interest and penalty. 4. Being aggrieved, the respondent Company preferred an appeal before the CESTAT. The CESTAT by order dated 02.12.1999 remanded the matte....
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....clarifies that all activities other than twisting and texturing are exempted. Therefore, there are no grounds for invoking the extended time limit, inasmuch as show cause notice has been issued in 1998 demanding duty relating to the period from 04.07.2995 to 27.10.1996, the same demand cannot be upheld. Since, we are allowing the appeals on the ground of limitation, we do not go into other issues." 4.2. The CESTAT quashed the notice on the ground of limitation and did not enter into the merits of the case. 5. Learned advocate Mr. Utkarsh Sharma for the appellant Revenue submitted that the adjudicating authority has rightly invoked the extended period of limitation because the respondent assessee was aware about the Notification No. 35/95-CE as well as the Notification No. 84/95-CE by which the draw warping processing undertaken by the respondent assessee was considered as a manufacture as per Note 3 to Chapter 54 which has been inserted on 16.03.1995. It was therefore submitted that there is willful suppression on the part of the respondent assessee for not making payment of duty though the activities carried out by it was manufacture as per the said Notification. 5.1. It ....
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.... of Central Excise, Allahabad reported in 2004 (165) ELT 494 (SC) wherein the Hon'ble Apex Court has held that the show cause notice would be in time only if the Revenue could invoke the extended period under Section 11A of the Act on the ground that the assessee has been guilty of fraud, misrepresentation or willful suppression and in absence of any willful suppression and non-responding to the demand of the Revenue to take out a licence and submit accounts could not have been considered as willful suppression. 6.2. Reliance was also placed on the decision of the Hon'ble Apex Court in case of Anand Nishikawa Co. Ltd., v. Commissioner of Central Excise, Meerut reported in 2005 (188) ELT 149 (SC) wherein after referring to the decision of Apex Court in case of Tata Iron and Steel Co. Ltd. v. Union of India reported in 1989 (35) ELT 605 (SC) and the decision in case of Pushpam Pharmaceuticals Co. v Collector of Central Excise, Bombay reported in 1995 Suppl. (3) SCC 462 wherein the meaning of the expression "suppression of facts" in proviso to Section 11A of the Act was considered and it was held that the term must be construed strictly, as it does not mean any omission and the act....
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....hat the assessee had been guilty of fraud, misrepresentation or willful suppression. It is patent from the facts recorded by the Tribunal that there was no willful suppression, let alone fraud or misrepresentation. That the assessee was not responding to the Revenue's demand to take out a licence and submit accounts was clear and overt and the Revenue cold have taken action based thereon. The show cause notice, therefore, must be held to be beyond time." 8. In view of the above dictum of law only because the respondent assessee was under impression that as per Notification No. 84/95-CE it was not liable to pay the excise duty, it cannot be said that there was willful suppression of facts. The Hon'ble Apex Court in case of Anand Nishkawa Company Ltd. (supra) has held as under:- "25. In this view of the matter, we are unable to persuade ourselves to agree with the finding of the CEGAT as admittedly, the products of the appellant were inspected from time to time and the department was aware of the manufacturing process of the products although the appellant might not have disclosed the post forming process in detail. 26. In Tata Iron & Steel Co. Ltd. vs. Union of ....
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....ct of activities carried out by the respondent assessee of draw warping was known to the department and as held by the Hon'ble Apex Court in the aforesaid decisions when both the parties were knowing the fact, the omission by the respondent assessee to get the registration would not amount to suppression. 10. The Hon'ble Apex Court in case of Padmini Products (supra) has held in paragraph 8 as under:- "8..... Failure to pay duty or take out a licence is not necessarily due to fraud or collusion or wilful misstatement or suppression of facts or contravention of any provision of the Act. Suppression of facts is not failure to disclose the legal consequences of a certain provision. Shri Ganguly, appearing for the revenue, contended before us that the appellants should have taken out a licence under rule 174 of the said Rules because all the goods were not handicrafts and as such were not exempted under notification No. 55/75 and therefore, the appellants were obliged to take out a licence. The failure to take out the licence and thereafter to take the goods out of the factory gate without payment of duty was itself sufficient, according to Shri Ganguly, to infer that the a....